PuraCap suit may impact Cipla's $550-million deal

In an email response seeking comment, PuraCap said its complaint was publicly available at the US District Court for the Southern District of New York.Vikas Dandekar | ET Bureau | October 27, 2015, 08:46 IST

MUMBAI: Cipla could face roadblocks in completing the $550-million deal it signed in September to acquire Inva-Gen and Exelan of the US. PuraCap Pharmaceutical, a New Jersey-based drug maker, filed a civil lawsuit last week against InvaGen and Exelan in a US court alleging that InvaGen breached certain obligations to Pura-Cap by “improperly negotiating” with a unit of Cipla when it was legally prohibited from doing so.

An InvaGen spokesperson, however, said the complaint will not impact the deal with Cipla. “We are actively trying to resolve it (the issue with PuraCap),” the spokesperson told ET.

A Cipla spokesperson said since Cipla was not a party to the suit it has no comment to make. In an email response seeking comment, PuraCap said its complaint was publicly available at the US District Court for the Southern District of New York but didn’t provide any other specific information.

In an earlier statement, PuraCap said it was seeking damages from InvaGen but did not provide details on the alleged violations or breech of obligations. An industry source said the dispute could be related to some manufacturing contracts, but this could not be verified. PuraCap has a presence in branded and private label drugs, in addition to over-the-counter and prescription products.

Although strong in markets like India and Africa, Cipla lags its leading local peers in terms of market share in the US. The deal is aimed at boosting its presence in the US, from where it targets to generate at least 20% of overall revenue by 2020.

The two companies — InvaGen and Exelan — are expected to bring scale to Cipla via access to a wide-ranging product portfolio, including cardiovascular, anti-infective, CNS, anti-diabetic and anti-depression drugs that had combined annual revenue of about $225 million. At the time of the announcement of the deal, Cipla said it had access to about 40 applications for new generic drugs, 32 marketed products and 30 pipeline products that were expected to be approved over four years. Through Exelan, Cipla said it got access to the government and institutional market.

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